Declining Home Ownership

The
decline in home ownership levels in New Zealand is a
reflection of changing social and economic conditions - not
a disaffection with home ownership - according to a Massey
University/Real Estate Institute of New Zealand Survey of
those renting property in the private sector.

While home
ownership in New Zealand has fallen from a world high of
73.7 percent in 1986 to 66 percent by 2001, 60 percent of
those surveyed said they planned to own their own home. Of
these 30 percent aimed to own within 3 years.

This latest
survey of 350 people renting properties was designed to
identify the motives and circumstances of those renting
rather than owning property, and was carried out in May by a
team led by Professor Bob Hargreaves from Massey
University’s Department of Finance, Banking and Property in
Palmerston North.

The National President of the Real
Estate Institute of New Zealand (REINZ), Mr Rex Hadley,
today welcomed the research findings “because although they
paint a rather sad picture for some of those renting because
of economic necessity, they also confirm that the ethic of
home ownership is alive and well with the vast majority of
those renting planning to achieve home ownership as soon as
they can.”

Mr Hadley says much has been said about our
“excessive’ levels of home ownership from a savings
perspective.

“There are no shortage of critics of New
Zealand’s relatively high level of home ownership which is
claimed to show a lack of savings, and those people tend to
hold up the higher personal savings of some Asian and
European countries, and their proportionately lower levels
of home ownership, as a good example.

“Interestingly
enough, the international benchmarks for the survey showed
Singapore has the world’s highest levels of home ownership
as well as having a high level of personal savings.”

Mr
Hadley says the belief in home ownership as a form of
savings is underlined by the survey with only 7 percent of
respondents believing they can receive better returns
elsewhere.

International figures show New Zealand shares
the same level of owner occupation as the United Kingdom, is
higher than Germany on 51 percent, but lower than Australia
on 70 percent, Ireland on 80 percent and Singapore on 90
percent, all countries with reputedly a better savings ethic
than New Zealand.

“This survey clearly shows that New
Zealanders prefer to own their own homes but are finding
that goal increasingly harder to achieve, with financial
constraints and job security being the two largest
impediments to achieving home ownership.”

The survey
identified insufficient job security as an important reason
for not buying a house with 62 percent of respondents
specifically citing lack of job security as the main
employment-related reason determining their decision not to
buy.

Financial constraints were illustrated by the
finding that 44 percent found they were unable to save a
deposit because of insufficient income while an additional
27 percent identified the need to clear existing debt as
their primary financial goal.

In overall rankings,
financial circumstances were cited by 71 percent of
respondents as reasons for not buying a home while other
factors such as career and lifestyle scored less than 15
percent each.

The overall conclusions of the survey were
that:

Factors driving the trend to renting, include

-
Labour market changes, including corporate downsizing and
global competition, and shorter worker contracts - Societal
changes, with families forming later and delaying marriage
and children. More solo parents and single person
households.

Mr Hadley
said that the encouraging finding was that 43 percent of
respondents agreed or strongly agreed that buying a house
was a priority, and 60 percent of respondents strongly
disagreed or disagreed with the proposition that home
ownership tied them down.

When asked whether renting gave
more money for personal consumption, 55 percent strongly
disagreed or disagreed, suggesting, “the home ownership and
saving ethic in New Zealand remains intact” according to Mr
Hadley.

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